Flood insurance bill clears Congress

Mar. 13, 2014
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In this Oct. 15, 2013, file photo, a fence closes off the ruins of an oceanfront home in Mantoloking N.J. that was damaged by Superstorm Sandy. The House is pressing ahead with legislation to roll back a recently enacted overhaul of the federal flood insurance program after homeowners in flood-prone areas complained about sharp premium increases. (AP Photo/Wayne Parry, File) ORG XMIT: WX124 / Wayne Parry, AP

by Deborah Barfield Berry, Gannett Washington Bureau

by Deborah Barfield Berry, Gannett Washington Bureau

WASHINGTON - The Senate voted Thursday to approve bipartisan legislation that would block dramatic increases in premiums paid by some property owners under the federal flood insurance program.

The 72-22 vote sends the bill to President Obama, who is expected to sign it. The House overwhelmingly approved the legislation last week.

"We basically ended up with a really balanced compromise between some of the things the Senate wanted (and) some of the things the House wanted,'' said Sen. Mary Landrieu, D-La., who championed the measure in the Senate. "But what we all wanted was affordability, and we all got it."

Under the bill, called the Homeowner Flood Insurance Affordability Act, premiums under the National Flood Insurance Program (NFIP) could increase no more than 18 percent per property annually.

The House legislation was crafted by Republican Rep. Michael Grimm of New York in response to premiums that in some cases had increased tenfold.

A bill the Senate passed in January, authored by Sens. Robert Menendez, D-N.J., and Johnny Isakson, R-Ga., would have delayed premium increases for about four years until the Federal Emergency Management Agency completed a study on how to make the higher rates affordable.

The compromise bill approved Thursday was the product of intense negotiations in the House.

"We just feel good,'' Rep. Bill Cassidy, R-La., who worked on that compromise, said after Thursday's vote. "We feel good on behalf of all those homeowners who were so frightened about their ability to keep their homes, and now they can be assured.''

Supporters of the measure said the premium increases were making it impossible for many people to keep their homes or sell them.

Critics, however, say taxpayers will be left to foot the bill for the financially troubled insurance program.

The premium increases were required under a 2012 law known as Biggert-Waters that was designed to make the government's flood insurance program financially solvent by bringing rates in line with true flooding risks.

Premiums under the program have been heavily subsidized by taxpayers, and the program is $24 billion in debt.

Biggert-Waters imposed 25 percent rate hikes on some but not all properties that have received premium subsidies through the National Flood Insurance Program. The program, run by FEMA, has traditionally charged premiums at about 40-45 percent of their full cost, with taxpayers subsidizing the rest.

The compromise legislation faced opposition from some conservative Senators, who said it was rushed to a vote.

Republican Sen. Mike Lee of Utah complained supporters of the bill wouldn't include his amendment to disallow premium refunds for owners of second homes and vacation homes.

"We ask that working families around the country, including taxpayers in my state, not have to cut an additional check to the owners of coastal vacation houses,'' Lee said before the vote.

Congressional efforts to address the soaring flood insurance premiums are a campaign issue in some political races, including the race for Landrieu's seat in Louisiana. Landrieu and Cassidy, who is running for the seat, are both claiming credit for the success of the legislation.

Sen. Tom Coburn, R-Okla., said the bill "solved a very short-term problem and made it a long-term problem." Coburn argued that "we were in such a hurry to take the political pressure off of the increases â?¦ we chose politicians to win and the future to lose in this country.''

Still, passage of the bill reflected a rare moment of bipartisanship in a highly partisan Congress.

Some government watchdog groups had opposed the effort to roll back the increased premiums, saying taxpayers should not have to subsidize flood insurance coverage for homeowners who build or buy in high-risk areas.

"It's not going to be very affordable for taxpayers,'' Steve Ellis, vice president of Taxpayers for Common Sense, said recently. "This program, that's $24 billion in debt to the Treasury, is going to be saddled with these changes.''

In addition to capping annual premium increases at 18 percent, the bill allows people buying homes covered under the federal flood insurance program to pay the subsidized premium rate at first, rather than the higher rate reflecting true flooding risk.

The bill will be financed through small assessments on all NFIP policyholders that would go into a reserve fund for FEMA to pay future claims.